Legal & General’s Cash Rises on Annuities, Income Protection

Legal & General Group Plc (LGEN), the U.K.’s
fourth-biggest insurer by market value, said cash generation
rose 2.5 percent on sales of annuities and income-protection
products.

Legal & General produced 616 million pounds ($994 million)
of cash, defined as profit before dividends and reinvestment, in
the nine months to Sept. 30, compared with 601 million pounds a
year earlier, the London-based company said today in a
statement. That beat the 608 million-pound average estimate of
15 analysts surveyed by the company.

Legal & General has climbed 30 percent this year as the
prospect of a break-up of the euro receded and the firm
increased its first-half dividend by 18 percent. The insurer has
tripled cash generation since 2007 by cutting costs, reducing
commissions paid to sales advisers and withdrawing money-losing
products.

“This is a good set of numbers, with cash in line and a
beat on sales,” Edward Houghton, a London-based analyst at
Sanford C. Bernstein with a buy rating on the stock, wrote in a
note to clients today.

Sales rose six percent to 1.4 billion pounds in the nine
months to Sept. 30, boosted by a 28 percent increase in the
third quarter alone, the insurer said. Revenue from annuities
and income protection products rose 69 percent in the three-
month period to 132 million pounds, it said.

So-called income protection products, which cover death and
illness, experienced high demand “as retail and corporate
customers seek to reduce exposure to financial risk,” the
company said.

“Global economies are undergoing profound structural
changes,” Chief Executive Officer Nigel Wilson said in the
statement. “We have the solutions to meet gaps emerging from
public and private deleveraging.”